S.Korea’s No.1 soju maker HiteJinro to foray into global beauty market

HiteJinro Group, South Korea’s No. 1 alcoholic beverage maker with a century-old history, has chosen cosmetics development and production as its new growth engine to diversify its business portfolio heavily relying on alcoholic drinks whose demand has stayed stalled.

Seoyoung e&t Co., a beer cooler-making and food-importing company under HiteJinro Group, acquired a full stake in BNB Korea Co., a local cosmetics original design manufacturing (ODM) company, from a Seoul-based private equity firm SKS Private Equity, the company announced on Thursday.

It did not disclose the financial terms for the acquisition, which was joined by financial investors Korean PEF The Turning Point and investment firm SB Partners.

“Amid intensifying competition in the mainstay (alcoholic drink) business, we have actively explored new opportunities, and then the K-beauty’s ascent has grabbed our attention, leading us to take over BNB Korea,” said an official from Seoyoung e&t.

The company hopes BNB Korea with a solid research and development capability helps it quickly expand its presence in the overseas beauty market, the official added.

SEOYOUNG E&T AT THE CENTER OF HITEJINRO OWNERSHIP

Seoyoung e&t is at the core of HiteJinro Group’s ownership structure considering that its largest stakeholder is HiteJinro Group’s apparent heir Park Tae-young, the oldest son of the group’s Chairman Park Mun-deok.

The son holds a 58.44% stake, followed by his younger brother Park Jae-hong and his father with 21.62% and 14.69%, respectively.

HiteJinro Group is led by HiteJinro Holdings Co., which also controls Kospi-listed HiteJinro Co. and 16 non-listed affiliates, including Seoyoung e&t.

But Seoyoung e&t apparently controls the group in the cross-shareholding structure.

The group’s latest acquisition is expected to play a critical role in the century-old HiteJinro Group’s business future with diversification, said the company’s unnamed official.

SLOWDOWN IN THE KOREAN ALCOHOLIC DRINK MARKET

HiteJinro has been actively looking for new opportunities in new sectors and markets abroad after grappling with stagnating profit growth at home due to the saturated alcoholic beverage market in recent years.

HiteJinro reported 123.9 billion won ($90.3 million) in operating profit in 2023, down 35% from the prior year.

To shore up its profitability, it has shifted its eyes to overseas markets.

HiteJinro will open its first overseas brewery in Vietnam in 2026 as part of its grand plan to beef up foreign sales of its soju products to 500 billion won by 2030, which was announced in June.

The new overseas sales target is three times bigger than this year’s goal to rake in 158.5 billion won.

Soju, often called Korean vodka because of its strong alcohol content, is a clear, distilled alcoholic beverage traditionally made from rice. It originated in Korea and has been the country’s most sought-after alcoholic beverage.

HiteJinro controls 65% of the 3.5 trillion won Korean soju market, with smaller rival Lotte Chilsung Beverage Co. claiming 20% and others holding the remainder.

It currently exports soju to 86 countries, starting with Vietnam in 1968.

In recent years, however, the clear, colorless distilled Korean firewater has been losing ground at home due to the nation’s diversified alcohol drink market crowded by imported beers, whiskeys and wines.   

K-BEAUTY ON A ROLL

BNB Korea is the country’s 15th-largest cosmetics ODM company in terms of sales.

Founded in 2011, BNB Korea reported 7 billion won in operating profit on sales of 44.2 billion won in 2023, which were up 52.2% and 34.3% on-year, respectively.

It makes beauty products for about 100 customers, mainly small and fledgling Korean cosmetics companies. d’Alba, Dermafactory and Dr.Pepti are also its customers.

Korean beauty products are popular in overseas markets partly thanks to the ongoing Korean pop culture boom.

In response, foreign companies such as Amazon.com and the world's largest cosmetics group L'Oréal are actively reaching out to Korean cosmetics manufacturers to introduce Korean beauty products to overseas markets.

Write to Hun-Hyoung Ha at hhh@hankyung.com
Sookyung Seo edited this article.